India Charts Plan To Boost FDI, Attract Firms Out Of China
India has started consultations with stakeholders on ways to step up foreign investment and work on a continuity plan to start exports once the COVID-19 pandemic is over. Commerce and industry minister Piyush Goyal has launched discussions with investment bankers, consulting agencies, law firms and various export promotion councils (EPCs).
His ministry is reportedly mulling over setting up groups to draw up strategies for sectors where China has vacated space. During his meeting with consulting and law firms, Goyal is said to have focussed on investing in interior areas and moving beyond big towns and cities.
The ministry’s engagement with potential investors had slowed down due to the pandemic and has gained momentum over the last few days after Prime Minister Narendra Modi’s repeated calls to focus on domestic production. Companies are also looking to diversify their production bases beyond China.
One approach will be to focus on areas like textiles and auto parts where India has competitive strength, and scale them through more investments, especially from international companies. The other approach is to look at products, where large imports are taking place, and try to substitute them through domestic production. A list of so-called champion sectors has been prepared, which can be among the focus areas. A third strategy is to get Indian micro, small and medium enterprises (MSMEs) to scale up.
A prime concern is the inability of local industry to build ‘Brand India’ with worldwide recognition, be crucial to attract global investors.
The ministry’s continuity plan includes cutting down import dependence, especially from China, by focussing aggressively on substitution while improving safety compliance and quality goods to gain global market share. It has suggested forming groups of thinkers to brainstorm on what should be done after the pandemic for world dominance with a humanitarian approach.
Goyal’s ministry is working on identifying the specific sectors that can be taken forward in the immediate future for exports purpose.
Around a thousand global firms currently working in China are planning to make India their new destination. Similarly, about 300 companies have also made preparations to set up their units in India, and have already started their negotiations with the Indian government, according to a newspaper report.
Many South Korea companies are also showing their eagerness to shift to India. Japan has already announced a mega package of $2 billion for its companies, willing to shift their plants and factories outside China.